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Tax Incentives for Businesses

Three federal tax incentives are available to help businesses comply with the ADA. The incentives support businesses as they remove architectural barriers and accommodate employees and/or customers with disabilities. Many states also offer similar tax incentives. Below you will find information about these incentives, as well as links to specific tax forms and further information.

Small businesses are defined as those that have revenues of $1,000,000 or less OR 30 or fewer full-time employees during the previous year

Can be used for removing architectural barriers in existing facilities, equipment acquisitions, and auxiliary aids and services

Examples of eligible expenses: readers for customers or employees who are blind or have low vision, sign language interpreters for customers or employees who are deaf or hard of hearing, adaptive equipment, production of accessible formats of printed materials (e.g., Braille, large print, audio tape, computer disk), removal of architectural barriers in facilities or vehicles (must comply with applicable accessibility standards), fees for consulting services (under certain circumstances)

The amount of tax credit is equal to 50% of the eligible expenditures in a year, over $250 and up to a maximum expenditure of $10,250; there is no credit for the first $250 of expenditures, therefore, the maximum tax credit is $5,000

New construction expenditures are NOT eligible

Can be used annually, but expenses may not be carried over from one year to the next

Tax credit of up to 40 percent of the first $6,000, or up to $2,400, in wages paid during the first 12 months for each new hire

The WOTC is subject to yearly Congressional renewal; it is currently available to December 31, 2011

Eligible employees must work 180 days or 400 hours; summer youth must work 20 days or 120 hours; a partial credit of 25% for certified employees, who worked at least 120 hours, but less than 400 hours, may be claimed by the employer

Must complete and submit IRS Form 8850, "Pre-Screening Notices and Certification Request for the Work Opportunity and Welfare-to-Work Credits," to your local State Employment Security Agency (SESA); to get IRS form 8850 call 1-800-829-3676 (Voice) 1-800-829-4059 (TTY) or visit the IRS Publications Index

Maryland: Maryland Disability Employment Tax Credit

Key Facts:

The Maryland Disability Employment Tax Credit allows businesses that hire employees with disabilities to take a tax credit for both wages paid to these employees and also for childcare and transportation expenses paid on their behalf.

The amount of the credit in the first year is 30% of the first $6,000 paid for a maximum allowable credit of $1,800. Childcare / transportation expenses are eligible for a credit up to $600. The amount in the second year is 20% of the first $6,000 paid for a maximum allowable credit of $1,200. Childcare / transportation expenses are eligible for a credit up to $500.

If the credit is more than the tax liability, the unused credit may be carried forward for the next five tax years.

A credit will be allowed only for employees hired before July 1, 2006.